Today, people are living longer, healthier, and more productive lives and as a result, in considerable part, of the efforts of the research-based pharmaceutical and biotechnology industries in discovering new medicines to prevent, cure, and treat diseases.
Some trends in the industry are herbal medicines and generics. Herbal medicines have the added advantage of less government regulation than traditional medicines. The generic drug market continues to grow due to the loss of patent protection, on patented drugs. Generic drugs account for 43% of U.S. prescription sales with $12 billion in sales.
Most of the companies in the pharmaceutical industry deal in an international market. This global environment brings with it its own unique challenges as well as benefits. A company must consider and deal with cultural differences of the people as well as numerous government agencies. There are also other concerns and risks that include importation limitations, pricing restrictions, economic destabilization, and fluctuations in foreign currency exchange rates.
In the US, companies work closely with government agencies such as the Environmental Protection Agency (EPA) to maintain and improve on meeting all laws and guidelines. Some areas of environmental policies that they need to comply with include: Clean Air act regulations, pollution prevention, guidelines and limitations for wastewater discharges, and environmental assessments.
Another government agency, the Food & Drug Administration (FDA) regulates the pharmaceutical industry in the US. The FDA not only reviews new products and approves them for market but they also audit and inspect a pharmaceutical company's facilities and procedures, to ensure that they are in compliance with guidelines.
Once FDA approved, a pharmaceutical product is patented. The patent life of a drug is twenty-five years.
The organizational structures of most pharmaceutical companies are similar. There is a CEO and vice presidents that head each of the main divisions, which are then broken down into various specialized departments. Among these divisions (but not limited to) are Research and Development, Human Resources, Technical Operations, Finance, Sales and Marketing, and Business Development. These divisions are staffed with: scientists, technicians, managers, lawyers, analysts, administrative assistants, sales representatives, etc.
Pharmaceutical sales account for about $300 billion annually. Having the largest market, the US ranks in at first place, Europe comes in second, followed by Asia-Pacific.
Most of the world's pharmaceutical research and development is conducted in the United States. For product development a company will identify their market need, the disease area, the specific diseases, and what areas of the world would give optimal sales. Unfortunately, orphan drugs are not high on the money making list and thus are not pursued as aggressively for development. An orphan drug is developed for treatment of rare diseases, defined as a disease that effects fewer than 200,000 people in the United States.
The high prices of pharmaceuticals is due largely to the competitive rival products, the market size, their competitive substitutes, the costs of goods, and the cost of development. The more profit from drugs a pharmaceutical company makes, the more they can spend on research development of new drugs. The industry is using new knowledge and techniques to understand the root causes of diseases, rather than just the symptoms, and thus revolutionize the way new drugs are discovered and developed. The average price for developing a drug is $500 million to $800 million.
Achieving success in this industry is based on: innovation, speed, and growth. The strategic plan is to grow at a rate greater than that of your competitors, you need to be the best in the industry at discovering developing, manufacturing, and marketing products as well as supporting those already on the market.
Statement of the Industry Branded pharmaceutical companies are research intensive and focus on discovering and marketing prescription drugs and innovative products that will fulfill an unmet medical need. They are also involved in the development of diagnostic products, vaccines, vitamins, fine chemicals, and animal health products. Another type of pharmaceutical company deals in the generic market. This company's concentration is multi-sourced products.
While each company has its own ways of conducting day-to-day business, branded pharmaceuticals all share in the philosophy of what it takes to succeed: to become world-class in terms of new products. Growth is achieved by making the most of current assets and expanding product portfolios. Focus is put on realistic sales targets, careful expense allocation, and constant monitoring.
For continuous growth and to make (or keep) a particular company an industry leader, you have to have a strong pipeline (which includes R&D and/or outlicensing compounds) and maintain the sales of products already on the market. This of course will ensure a growing sales volume. In terms of manufacturing, this also means while producing these products in quantities needed, keeping costs down, and the ability to support the customized manufacturing processes that are needed.
Within any organization, it's important to keep your employees motivated and have a feeling of ownership in the company and responsibility in their jobs. Asking employees for their suggestions and rewarding those put into action gives employees an opportunity to 'have a say' in how things are run and has proven to be an effective motivator. A periodic survey of employees in different divisions gives management a look at how the internal workings of the company are doing. Are the people happy and if not, why not? Performance management and internal communication are important. Constant open dialogue between manager and employee is needed to know how to work together to improve and become the best in what they do. Reaching not only company goals but also reaching individual employee goals achieves a rewarding environment for people to work in. Managers have to give employees constructive feedback, encouragement, and guidance.
Pharmaceutical companies employ thousands of people and recognize the importance of having professional and personal harmony. Each company has implemented their own incentives to make their company the employer of choice. Some programs are: benefits packages, tuition reimbursement, rewards and recognition programs, fitness centers, on-site child care, 401K plans, profit sharing, flex time, employee clubs, variable pay, and credit unions. When making a decision of employment, these options are weighed just as heavily by a potential employee as is salary and job functions.
Also very important is customer satisfaction. Asking customers for feedback, whether they are vendors, clinical investigators, pharmacists, nurses, physicians, or a patient, is a true way of answering the question, "how are we doing?" This provides an opportunity for continuous improvement in meeting customer's needs.